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AAPL – NFLX – SPY 1-21-16

So our new year’s prediction of a steeper pullback then the ’15 pullback came true within 3 weeks!

Well did it?

Last year’s 182.4 low was a 14.7% pullback of the high (ATH), while Today’s low is a 15.3% pullback of the ATH, and a 12.9% pullback of this year’s high.

I’m still thinking we can see a pullback up to the 38.2% retrace level on the monthly chart, so we’ll keep that on the table for the rest of the year.

daily chart:

If you’re into trendlines you might want to observe the downsloping supply line. If the 113%XA level holds we have a trading range between the 113 and 88.6%XA, since that proved to be significant on about 3 previous candles as support and resistance.

Continuing on with some TD-lines analysis: 15min chart

We see that today a “point 5” TDsupply line served as resistance EOD. Maybe something to observe in next sessions.

Find the largest range from a high above a demand line, and subtract that range from the point where the line is broken, and you have yourself a target. I drew it in with the blue lines.

Note how the range of the first TD-line break is exactly the same range as the second TD-line break. The first one reached its target virtually to the penny, and reversed, and the second just briefly plotted a lower low.

That’s why I said today on twitter that this correction, still hasn’t seen a “panic” mode, In My Opinion. The technicals so far have worked very well, and the correction has been well structured.

You can apply the same rule for a potential Supply line break. Take the largest range from a low below the supply line and project that range to the upside at a break over the line.

So at this point,eventhough today saw a strong intraday rally, the downsloping channel hasn’t been broken (yet).

By the way, I strongly prefer using TD’s method of drawing trendlines, since imo trendlines are ambiguous, and prone to a trader’s bias. I suggest you do a little research on this topic and for example find out what the “qualified breakouts” are. (there are 3)

Ok back to our Harmonics, and optionsflow:

Starting with the 15min chart, we’ve used past week:

Mentioned yesterday that the “larger” pattern (colored in orange) could unfold. lo and behold, the LOD occurred within pennies of the lower level of its PRZ.

By midday we saw Put buying drying up, and flow turned into favor of the Calls. I broke it down in two indicators on this chart, the lower pane is this week’s expiration, and the middle pane is next week’s expiration.

Important level on this chart is the 185.35, which, if breached to the downside, could start yet another leg down. I’ve explained before that you can use this as a trailing stop. on each successive new high surrounded by a lower high on either side, the indicator will anchor this new high as a new C point and re-calculate the “entry”, which obviously will increase by each successive new higher C point.

Perfect application is the Excel calculator to keep you in a trade, if you took the long at the BullPRZ today. As you know I always advocate to sell enough of your position to keep only freebies overnight, and to make sure you have a profit no matter what happens. Due to that rule I walked away with a small profit on NFLX, even after I got stopped out of my remaining 110 calls this morning.

5min chart

Mentioned it before, these are my favorite patterns: XABCD out of a PRZ of an opposite pattern.

As you can see the 5min pattern already completed, and in order to get some more targets I’m watching a 10min chart :

Since the B point was only at 22% retrace of X, we can not qualify this as a valid XABCD pattern. we need to see a B point at 38.2%XA at minimum. (i use 35% to allow a little room).

So therefore you could imagine that we could see a small pullback, to start a new AB=CD, where A is the 12:50 low, and a B point maybe at the 15:30 high, and we’ll have to see if a C point can be qualified, which would have to be again a minimum 38.2% retrace of AB. So that would require a pullback to about 185 minimum.

So therefore I will give the aforementioned 185.35 level a little more room, before looking at a potential move lower. We saw a bit of consolidation just above the 113%XA daily level at 183.72. Pullback to that area would be interesting. but complete hypothetical at this point.